MediSoft has been in the European cardiorespiratory diagnostics market since 1977, and generated 2013 revenues of approximately $6.3 million with a net loss of $187,000.
MGC Diagnostics acquired MediSoft for $7.8 million in cash. In addition, MGC Diagnostics issued warrants to the MediSoft shareholders to purchase 168,342 shares of MGC Diagnostics common stock for $7.96 per share. The value of the warrants is approximately $421,000. The warrants have a three-year term expiring Aug. 1, 2017.
The total aggregate transaction consideration of $8.2 million, including the value of the warrants, represents a multiple of 1.3 times MediSoft’s 2013 revenues. Approximately $5.5 million was paid to MediSoft shareholders for the business operations, and approximately $2.3 million was paid to retire existing MediSoft indebtedness.
As of Dec. 31, 2013, MediSoft had tangible assets of approximately $5.9 million, which included independently-valued land, building and fixed assets of $2.7 million. MediSoft's manufacturing facility and administrative office is 38,000 square feet, originally built in 2005 and expanded in 2010. The remaining tangible assets of $3.2 million were comprised of cash, accounts receivable and inventory.
The expected operational results from MediSoft for the remainder of fiscal year 2014 will not be accretive, after considering transaction costs. However, MGC Diagnostics expects the MediSoft acquisition will be accretive beginning with fiscal year 2015 results, and the potential value of the combined company synergies is expected to equal the total cash cost of $7.8 million from 2015 through 2017.